More trouble for TV producers as broadcasters try to cut costs

Executives across broadcasting companies as well as production houses have confirmed to ET that commercial teams of TV channels have initiated informal discussions with producers, asking them to reduce the cost by 20-40%.

MUMBAI: Under stress due to a halt in all production activities, television producers are in for another rude shock following a decision by the broadcasters to renegotiate the existing deals, a move that reflects the extreme cost pressure now impacting the entire supply chain across broadcasting industry.

“2020 will be super stressed,” said Abhishek Rege, CEO of India’s largest reality content producer, Endemol Shine India. “On one hand we will have to look at how to reduce cost, and on the other side there will be cost escalation due to on-ground safety measures.”

Executives across broadcasting companies as well as production houses have confirmed to ET that commercial teams of TV channels have initiated informal discussions with producers, asking them to reduce the cost by 20-40%.

Earlier, Uday Shankar, chairman, Star & Disney India and president, Asia Pacific of the Walt Disney Company, while talking to ET Now, had commented that the broadcasters will have to reduce programming cost once the lockdown is lifted. “All broadcasters will have to very aggressively revisit their programming cost. Those who were making 10 shows will be forced to start with 3-4 because of the logistical as well as the financial pressure,” Shankar told ET Now.

“Since advertising revenues of broadcasters have taken a huge hit, everyone is talking about rationalisation,” said Mautik Tolia, CEO, Bodhi Tree Multimedia. “At this time, nobody has a clear idea on what is the extent of the damage, which can be ascertained only after the lockdown is lifted. The situation on the ground is changing every day. But for the cost to come down, the entire ecosystem will have to scale down.”

A couple of producers, who had their daily soaps running on three mainline Hindi general entertainment channels, told ET that broadcasters have indeed reached out to them with new proposals.

“All producers making shows for Star Plus, Zee TV, Colors, Sony Entertainment TV, have received calls seeking a reduction of cost. Some of us, who were pitching new shows, have been told that the negotiations will start at 60% of the proposed cost. It’s not easy,” said executive producer at an independent production company.

Other producers argue that it is easy to talk about cutting cost, but not easy to implement, if you need quality content.

“If you cut cost and reduce quality, viewership will go down, which will ultimately impact ad revenues,” one executive explained.